Day: January 1, 2017

When I first started reading finance articles online somewhere between 2007 and 2009, one of the first authentic voices that I discovered was J.D. Roth of the website “Get Rich Slowly.” The blog was written in a diary-style format that really give you insights into both the psychological and mathematical aspects of debt elimination and the pursuit of investments.

Sometime during The Great Recession, J.D. Roth decided to sell his website to Quinstreet. A lot of readers held this against him, particularly the fact that he agreed to a non-disclosure agreement in which there was a waiting period before the audience learned of the sales.

Generally speaking, each dollar that you save can be deployed toward one of the following assets: cash, commodities/hard assets, bonds/fixed income, real estate, and stocks/business ownership. Below, I discuss the characteristics and historical performance of each asset class and I list my view of the best assets to own in ascending order:

Worst Asset Class: Cash And Cash-Equivalents

Cash is, by definition, designed to erode in value. The Federal Reserve of the United States has a stated target of 2-3% inflation (depending on the year), meaning that every dollar in your pocket will only buy $0.97 or $0.98 worth of goods this time next year as you can purchase right now. Since 1964, the purchasing power of the United States dollar has decreased in value by a factor of 7.7, making cash just about the worst asset to own over the long term. If you put $1,000 into a safety deposit box in 1964, you would only be able to purchase $129 worth of goods today.

One of my general goals for writing finance articles, which I am going to focus on specifically in 2017, is to point out that fear arising from a stock price drop in a profitable business is one of the most self-destructive emotions that you can carry with you as you go through your investing life.
The good news is that there are four ways you can overrule those worst instincts that act as the devil sitting on your shoulder telling you to sell low. I discuss them below.

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